U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

terms. Much of the increase in U.S. exports is in agricultural products, so simulations that
do not include agricultural liberalization, such as the alternative scenario in Choi and Schott,
have smaller estimated export changes. In addition, more recent studies have estimated
smaller increases in agricultural exports than earlier studies, which has led to lower overall
U.S. export increases in these studies (table 7.1). This difference can be seen by comparing
sectoral exports estimated by USITC in 2001 to Zhuang and Koo in 2006, which are the only
two studies to report sectoral bilateral trade (table 7.2). The estimated change in imports
from Korea has been more steady across studies. Textiles and apparel are important
components of these imports, and estimates of the overall increase in U.S. imports from
Korea have fallen slightly, chiefly for two reasons: Korean textile and apparel output has
declined, and estimated protection has declined with the phaseout of quotas under the
Agreement on Textiles and Clothing. This reduction is reflected in reduced U.S. textile and
apparel imports in Zhuang and Koo compared to the earlier USITC study.
Table 7.2 Changes in bilateral trade by sector: Selected economic literature on a U.S.-Korea FTA
U.S. exports to Korea
U.S. imports from Korea
(million dollars)
(million dollars)
Sector USITC Zhuang and Koo USITC Zhuang and Koo
All agriculture and food 10,424 4,370 193 90
Paddy rice 0 a
0 a
Fruits and vegetables 69 0 a
Other agriculture 9,432 178
Meat products 716 0 a
Dairy 207 15
All natural resources 91 540 1 110
All manufacturing 8,580 4,900 10,278 7,910
Textiles and apparel 163 240 7,008 5,240
Mineral, metal products 396 383
Midtech manufacturing 1,760 670
High-tech manufacturing 2,900 2,000
Other manufactures 8,021 2,887
All services 8 70 -209 -130
Total 19,175 b
9,880 10,262 7,980
Source: USITC, U.S.-Korea FTA: The Economic Impact of Establishing a Free Trade Agreement (FTA) Between the
United States and the Republic of Korea, 2001, 5-10; and Zhuang and Koo, “Implications of the Korea-U.S. Free
Trade Agreement,” 2006, 25.
Note: Because of differences in aggregation, studies do not report in all sectors and subsectors.
a Less than 0.5 million.
b Total as provided in original report.
Sectoral Output
Although welfare is the most commonly reported measure in these reports, four studies also
discussed sectoral output changes. The effect on U.S. output, when reported, was broadly
consistent across studies, despite differences in model structures, base years, and
liberalization scenarios. In general, estimated U.S. sectoral output changes are small,
generally less than two percent, with the largest decreases in textile and apparel sectors and
the largest increases in agricultural and natural resource products (table 7.3).
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